How To Get Business Insurance
Insuring your small business is an important component of risk management. Read this guide for a step-by-step guide on how to get business insurance.
You’ve already asked yourself if business insurance is necessary — and it certainly is. But how do you get business insurance and find the best fit for your business needs?
Small business insurance is an important cost of doing business, but obtaining coverage doesn’t have to be an overwhelming process. Once you know why you need to purchase business insurance, you can set out to confidently protect your business and the people you employ.
Nowadays, it’s possible to get business insurance from a reputable company in as little as thirty minutes.
Keep reading to learn how to get insurance for a small business. But first, if you’re wondering exactly what business insurance is and what it does, our “What Is Business Insurance?” piece will explain the fundamentals.
Table of Contents
What Do I Need To Get Business Insurance?
Business insurance is available to you regardless of your industry and type of business structure. But before starting your search or jumping into a conversation with an agent or broker, it’s best to have certain documents and information ready.
Here are a few potential small business insurance requirements:
- You should have an idea of how much coverage you need. High-risk and larger-scale businesses will need more comprehensive financial protection.
- You’ll need documents detailing your payroll and how many employees you have.
- If you’re already insured and are looking to switch carriers, you’ll need a loss run report.
- You may need to provide precise square footage if operating a physical storefront.
- You’ll need to know the value of your business assets, such as equipment and your building, if you own them.
- You’ll also need to provide how much your business earns annually.
Key Business Insurance Terms
In addition to the above information, you’ll be able to best decipher your needs once you’re familiar with the basic lingo of business insurance.
- A deductible is what you pay before your insurance policy becomes effective.
- A premium is the total cost of your policy, and although this is usually paid monthly, it’s sometimes possible to pay it in full.
- A limit is the total amount of money the insurance company will cover you for (so a $1 million limit will give you up to that much financial protection).
- Policy periods are the range of dates your insurance coverage is active.
- Damages are any money one is obligated to pay another, whereas damage refers to actual harm, such as bodily injury or property damage.
- Similarly, losses are damages for which your insurance company has reimbursed you.
- An exclusion is a specific incident, event, or circumstance that the carrier will not cover — be mindful of these as you’re shopping for policies.
- Lastly, an endorsement is coverage you can purchase to supplement your policy.
How To Get Business Insurance In 5 Easy Steps
If you are a small business owner and are starting to look at your business insurance options, we are here to help.
Follow these steps, and you’ll be well on your way to buying appropriate insurance coverage!
Step One: Assess Your Risks & Choose The Insurance You Need
You’ll first decide what type of business insurance you’re in the market for.
Give some thought to your legal requirements and the specific risks your company might face. Ask yourself questions such as:
- Are you in an area where natural disasters are a concern, such as increased fire risk (California) or flooding after hurricanes (Florida)? Look into flood insurance or additional commercial property insurance coverage.
- Do you want to insure your partnerships if you work with vendors?
- Are your employees exposed to potential physical harm necessary to perform their daily duties?
- Is handling customers’ property part of your everyday business operations?
- Do you or your employees need to drive a vehicle or truck as part of the job? Commercial auto insurance might be necessary.
- Could a frustrated client bring you to court for ill-informed advice, business-related or otherwise? Look into errors and omissions/professional liability insurance.
- Could you be sued if a good you produce harms a customer?
- Are you prepared and able to shoulder the financial burden of a business shutdown that results from a direct physical cause?
Knowing what you need is more than half the battle. Did you know you can insure your business from cyber-attacks? Tell your insurance professional about your risks and determine if there is coverage available.
Researching how your business can benefit from different kinds of coverage is a great place to start.
Give special consideration to insurance plans that you know will give you the best protection in light of your business’s inherent risks. (On the flip side — you’ll likely be throwing money down the drain if you’re paying for insurance that doesn’t address your most pertinent risks.)
Here is a list of some of the most common types of business insurance to get you started:
|Type of Insurance
|What It Covers
|Who It Is For
Protects your business from the threat of a lawsuit
Protects your building and things inside your buildings from damage and accidents
Businesses with a physical property site and products located in those physical locations
Provides resources if your business is forced to stop or relocate
Businesses located in riskier areas and businesses who might work with vendors in risky areas
Commercial Auto Insurance
Provides protection from accidents on your commercial vehicles
Businesses that rely on automobiles to do business
Provides protection to you and your employees should they become injured on the job
Professional Liability (E&O)
Protects your business during a lawsuit if your business commits errors or malpractices
Any business that provides a service
Product Liability Insurance
Protects a business from a lawsuit related specifically to the product it sells
Any business that manufactures, sells, or distributes a product
Home-Based Business Insurance
Protects any business-related items inside your home not covered by home owner's insurance
Any business owners running out of their own homes
Business Owners Policy
Includes both general liability and commercial property insurance
Provides a bigger ceiling for the legal costs of a lawsuit that extends your liability coverage
Once you’ve done your due diligence, you’re ready for step two.
Step Two: Gather Business Information
The small business insurance company you work with will need information about your business to accurately gauge your riskiness and give you a quote. Gather the information before you shop.
Generally, the details you’ll need to provide will depend on the kind of policy you’re buying. Similar to what’s been mentioned above, the most basic questions usually are:
- Where are you located?
- How many employees do you have?
- What is your payroll?
- How much does your business make?
Also, you should use this time as an opportunity to identify the specific facets of your business that will benefit the most from insurance. Here are a few real-world scenarios to help you get on track:
- A new ice cream shop recently bought brand-new equipment worth tens of thousands of dollars. Commercial property insurance will keep the business going if it needs to be repaired or replaced.
- A local restaurant just had a hiring boom. Workers’ compensation insurance will give the business much-needed financial assistance if those employees are injured on the job.
- An in-state truck delivery service is looking to insure a new fleet of trucks. Commercial property insurance, commercial truck insurance, and garage liability insurance will provide optimal coverage.
The more prepared you are, the better.
Step Three: Comparison Shop And Get Quotes
Now that you have all the numbers and pertinent information at your fingertips, it’s time to shop around and find the best fit for you and your business. There are a few ways you can do this.
Talk With An Insurance Agent or Broker
If you have larger or more complicated assets or many moving parts to your business, sitting down with an insurance expert is the way to go.
Brokers do not work for or represent a single insurance company. Rather, they work with you to determine your risks and select which types of insurance will provide your business with the best protection.
A few sites, including Insureon, CoverWallet, and Simply Business Insurance, will comparison shop for you and show you the best policies for your business. Some commercial business insurance companies also offer online quotes and rates.
Contact Insurance Carriers Directly
Many well-known carriers that provide home and auto insurance will also offer business insurance. If you’re set on pursuing coverage from a specific insurance company, pick up the phone and strike up a conversation.
Step Four: Purchase Your Policy
You know what you want, you’ve found the best price, and now the only thing left to do is purchase your policy. This step is straightforward — but how do you know you’re purchasing an insurance policy that really meets your needs?
Be on the lookout for these qualities:
- The insurance carrier has a solid reputation online and amongst business owners.
- The premium and deductible are in line with your budget.
- The policy doesn’t have specific exclusions that would leave you in a pinch and regretting your purchase.
- Your coverage realistically aligns with losses you’ll eventually have to claim.
Typically, business owners pay their insurance on a month-by-month basis. However, it’s sometimes possible to pay the policy in full up-front. You could even cut back on business insurance costs by doing so.
Done and done. Pay those premiums and protect your business!
Step 5: Reassess And Renew Your Coverage
Now you’ve got an insurance policy that best meets your business’s needs…at this moment, at least. As you grow and expand as a business, it’s important to update your policies. Your insurance needs will change as your business changes.
What are a few changes that could prompt a renewed insurance policy?
- Changes in your company’s size or scope, such as taking on new employees, venturing into new markets, or launching new products/services
- Changes in legislation or industry regulations that end up impacting your insurance requirements (a somewhat relevant example — as per the Affordable Care Act, once you have 50 full-time employees, you must provide them with health insurance)
- Changes in your business’s risk profile, such as a heightened exposure to cyber threats or other workplace-related risks
- Changes in your budget or cash flow that affect your ability to pay your insurance premiums and deductibles
Every year, you’ll have the chance to review your needs and choose the coverage that best addresses them.
Business Insurance Final Thoughts
Research what you need and want, gather your information, comparison shop, purchase, and renew every year. When it comes to small business insurance, it can be that simple.
Shopping online is a great start since you’ll get a better sense of your options and how much they cost. When you’re ready, have a conversation with an insurance expert familiar with your industry. Check out reliable business insurance providers like The Hartford or Nationwide Business Insurance.
At the end of the day, insurance is about peace of mind.
An accident, lawsuit, or Act of God tear shouldn’t be your business’s downfall. Follow the advice given here as you’re shopping for small business insurance, and rest in the assurance that your hard work is protected.